24 November 2015

Rebates - What a Concept

I would have loved to be there when they first dreamed up rebates.
"How are we going to price this?"
"We can sell it for $1,000."
"Hmm. Our market research suggests that a lot of people will back off from that. It's a little steep."
"How about $800?"

"We can make a profit on $800 but I don't know ... It would make our margins tight."
Long silence.
"What if .... and I'm just brainstorming here, so consider this before you say no .... what if we charge them $1,000 and then give them back $200?"
"You mean give them change?"
"No! Nobody has a $1,000 bill. No. We actually charge them $1,000. And then we give them $200 back."
"Why?"
"That way we're not just giving them a product. We're giving them MONEY!"
"Change! We're making change!"
"No! When they pay us $1,000, that's the price of the product. It's OUR money. Later, when we give back $200, it's like WE are giving THEM money. They'll love us. It's like we're paying them to buy our product. It's brilliant."
"It's change. We're making change."
"No. Listen, you're missing the point. They buy from us and we give them product AND money. Nobody else is doing this."
"Of course not. It's ridiculous.""Is it? What if it's brilliant? What if it works?"
"You really think this will work?"
"Yeah."
"Well, we can give it a try but I don't see how customers are going to fall for it. What will you call it?"
"Bait? You know, like when you put a little fish on the hook in order to get a big fish? We offer a little money to get more money?"
"Bait! No. That's far too obvious."
Silence.
"What about rebate?"